UK shoemaker pumped up by sole investor

Michael Bow is a reporter at City A.M. covering private equity, funds, investments and asset managers. He can be reached on michael.bow@cityam.com

Follow Michael

Michael Bow

HOTTER Shoes, the UK’s biggest shoe manufacturer, has been sold to Electra Private Equity in a £200m deal giving buyout house control of the company.

The 55-year-old business, captained by founder Stewart Houlgrave, has been owned by rival private equity firm Gresham since 2007, expanding from five to 56 stores during that time.

Listed fund Electra, which floated insurer Esure last year, yesterday said it had invested £85m of equity into the company.

Over £100m of bank debt is understood to be on the table to take over Gresham’s stake, pushing the total enterprise value of the business close to £200m. It is thought the deal gives Gresham a healthy return of more than 3.5 times, according to an investor source.

“We have been tracking Hotter for several years and it epitomises what we look for in a buyout investment – a really strong UK headquartered business with not only a UK growth story but also proven international potential,” said Electra’s chief investment partner Alex Fortescue, who led the investment.

Hotter now plans to open around 12 stores a year under Electra’s ownership as part of ambitious expansion plans. Gresham, which also own West Cornwall Pasty Company, said it wished management all the best.

ADVISERS HOTTER SHOES

ANDREW THOMASROTHSCHILD

Hotter Shoes used Rothschild’s well-regarded north west team to advise it on yesterday’s sale to Electra Partners. Leading the deal out of its Manchester office was managing director Andrew Thomas, who has previously worked on KKR’s acquisition of Pets at Home from Bridgepoint in 2010. Thomas heads Rothschild’s regional office network, which comprises the Manchester office as well as Birmingham and Leeds. The north west team, based in Manchester, has also worked on the sale of Liverpool-based B&M Retail to US firm Clayton, Dubilier & Rice as well as Permira’s recent purchase of Dr Martens. Rothschild opened its Manchester office in 1964 and is one of the few investment banks with a regional presence.